Everyone is crazy to get their hands on cryptocurrencies these days. This is no different for those who are out to enforce the law.
As Law Enforcement agencies across the world continue their crackdown on the illicit use of Bitcoin, they are reaping the lucrative rewards. While cryptocurrency seizures are commonplace in a number of countries, the relative anonymity of these seizures makes them harder to keep track of.
This ultimate lack of greater transparency over the seized assets has many in the community concerned. There is no doubt that criminal seizures are warranted but the funds should be documented and spending should be tracked.
In many ways, it seems as if the solution to lack of transparency in asset forfeiture is a decentralised database itself.
Lucrative Year for Seizures
It has indeed been quite a lucrative year to be seizing large amounts of cryptocurrencies. From the recent arrest of a hacker behind infraud and his 100,000 BTC stash to the takedown of Alphabay et al last year, agencies are no doubt making a windfall.
When these coins are seized, they are often sold in high profile auctions as prosecutors try to convert the coins to fiat. This was what happened last year in the case of the Utah fentynal dealer who had his Bitcoin seized.
In the US, the agency that is responsible for the seizure is entitled to the spoils. In the case of the Utah dealer, it was the DEA. In other cases it involved the local police unit, homeland security or the FBI. This has led to a rush by agencies to investigate cryptocurrency related crime.
Who is Enforcing the Enforces?
While the agencies in the US and elsewhere are within their rights to seize assets that are the proceeds of crime, there have been many occasions when these assets tend to either disappear or end up in weird places.
For example, last year we had the news that one of the biggest Bitcoin seizures in the world happened when Bulgarain authorities swooped on an organised crime group. In total, it was reported that they had managed to seize 213,519 Bitcoin.
Although this would no doubt, have been a sizable windfall for the Bulgarian authorities, the Bitcoin later ended up missing. The prosecutor later claimed that there were no Bitcoin captured in the raid. Hence, in between the claim of the seizure and the end of last year, billions of dollars in Bitcoin seems to have been misplaced.
While there many theories as to where the Bitcoin has ended up, one of the most prominent is that some agency or police unit managed to make away with it. Given the levels of corruption in Bulgaria, these assertions are not entirely unreasonable.
Of course, one cannot forget the most famous Bitcon seizure of all and the resulting fallout. This was the 2013 takedown of the Silk Road and the ensuing rouge DEA agent who tried to steal all of the Bitcoin for his own account.
Tracking Asset Seizures
There is no doubt a need for asset seizures to be tracked and recorded. While there are examples of centralised websites Forfeiture.gov that keep track of a number of seizures in the US, these leave much to be desired.
The records are not updated regularly and those that are there are often removed after a certain period. This means that it is easy for a particular seizure to fall off the map and the funds to disappear. While there have been no cases of abuse by US law enforcement agencies of cryptocurrency seizures, there have been a number of other reports that alleged abuse.
It therefore seems that one of the best solutions to tracking all asset forfeitures is to keep a record of it on a decentralised ledger. This would create confidence in the community as one could monitor and verify exactly where the assets were being used.
However, since when has a decentralised solution that empowers all being actively embraced by a centralised authority?
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